Welspun Living Faces Significant Profit Decline Amidst Ongoing Financial Challenges

Welspun Living, a midcap player in the Garments & Apparels industry, has recently undergone an adjustment in evaluation, reflecting the company's ongoing challenges. The latest financial data indicates a negative trajectory, particularly in the first quarter of FY25-26, where the company reported a significant decline in profit after tax (PAT) at Rs 87.55 crore, marking a drop of 45.2% compared to the previous four-quarter average.
The company's operating profit growth over the past five years has been modest, at an annual rate of 3.64%, which raises concerns about its long-term growth potential. Additionally, the debtors turnover ratio stands at a low 6.41 times, and net sales have reached their lowest point at Rs 2,260.57 crore.

Welspun Living has also underperformed the broader market, with a return of -35.14% over the past year, significantly worse than the BSE500's negative return of -4.13%. Despite these challenges, the company maintains an attractive valuation with a return on capital employed (ROCE) of 13.7 and a favorable enterprise value to capital employed ratio.

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